Three years ago,many well-meaning Americans suspended concerns about Barack
Obama’s experience,judgment,and associations in order to vote for an
“historic”president. To paraphrase H.L. Mencken,they got one —good and hard. Friday
night,for the first time in history,Standard &Poor’s downgraded
the U.S. credit rating from AAA to AA+. The United States earned the top rating
the moment such rankings began in 1917 —which means we maintained our AAA rating
through the Great Depression,stagflation,malaise,and the 1982 recession. Thirty
months of Barack Obama,and it is gone for the first time in history. Change we
can believe in!

The retrogression is neither surprising nor is it the only “historic”first
The One has perpetrated against the United States. Obama cajoled Congress for
weeks that it had to pass a debt ceiling compromise by August 2 to avoid just
this occasion. But as Rep. Tom McClintock,R-CA,pointed
out,“The purported cuts,even if realized,are far below the $4 trillion
deficit reduction that credit rating agencies have warned is necessary to
preserve the Triple-A credit rating of the United States government.”S&P
used precisely this language in its statement
about downgrading the United States,saying the resultant cuts fall “short of the
amount that we believe is necessary to stabilize the general government debt
burden by the middle of the decade.”It faults political gridlock and the lack of
“containment”of entitlements. The same administration experts who insisted GOP
sellouts on the debt compromise would stave off Friday’s downgrade also insisted
passing a stimulus plan
would hold unemployment below eight percent.

Even less surprising is the fact that the Obama administration actually
believed its rhetoric could stop the inevitable. When Standard &Poor’s began
hinting at its actions,anonymous officials began a whisper campaign that the
agency’s math was off. Jake Tapper reported
Friday evening,“Because of the pushback,the Obama administration is preparing
for the downgrade but is not 100% positive it’s going to happen,officials said.
And if the downgrade does happen,officials are not sure when it will
happen.”S&P downgraded the U.S. hours later. Choosing talk over action has
consequences,at home and abroad.

The consequences of his actions are unknown and foreboding. The new credit
rating may cause inflated interest rates to trickle down to states and
localities,or make all borrowing rates rise.

Economic growth would shrink the importance of the national debt —but such
growth is not expected as long as Obama is president. Economists expert growth
in debt,and its attendant economic disintegration,in the years to come. Under
most estimates,debt would amount to 88
percent of GDP in ten years. S&P warns under its pessimistic
scenario,debt will reach
101 percent of GDP in 2021. (AFP news service reported on Wednesday,that
U.S. borrowing topped
100 percent of GDP.) Carmen Reinhart of the Peterson Institute for
International Economics testified
before the House Budget Committee in March that growth begins to slow noticeably
once debt crosses the 90 percent threshold. The European Central Bank suggested
negative impacts begin at the 70-to-80 percent level. Even the adoption of the
debt compromise spooked the stock market,causing a decline for nine out of the
past ten sessions,a streak not seen since
1978 when Jimmy Carter was president.

The other two ratings agencies,Moody’s Investors Service and Fitch
Ratings,are not likely to follow suit…at least,not
yet. However,Moody’s has warned
the ratio would have to come down to 73 percent by 2015 “to ensure that the
long-run fiscal trajectory remains compatible with a AAA rating.”For its
part,S&P warned “a higher public debt trajectory than we currently assume
could lead us to lower the long-term rating again,”to AA,putting us on par with
such economic powerhouses as Spain
and Qatar.

You Wanted Obama to Make History? He Has

This slide toward mediocrity is only the latest of a string of historic
firsts in Obama’s presidency. Yes,Obama was the first black president. He has
been called the first….

Don Feder, GrassTopsUSA.com
Where’s the outrage?
Given what Barack Obama is doing to the Constitution, the economy and our
future, the American people should be up in arms (metaphorically speaking, civility-hysterics
take note). Citizens should be marching on Washington with pitchforks and
flaming brands in hand (also a metaphor).
Every city should see demonstrations to make the most raucous Tea Party rally
look like Sunday night in Pierre, South Dakota.
Instead, it’s a mental fog as usual. Hey, the unemployment rate is now
(barely) below 9 percent! Wasn’t that a cold winter? Gee, I wonder what zany,
drug-induced thing Charlie
Sheen will do next?
So, while America burns, we fiddle with our iPhones and talk about the
upcoming HBO series about vampire bootleggers and Borgias duking it out in
Camelot.
Other than Tea Party activists, the public seems supremely unperturbed by
Obama’s relentless assault on America. The president’s March 21-27 approval
rating was 45 percent. At the same point in their first terms, Clinton’s
approval rating was only three points higher – Reagan’s three points lower. Both
were re-elected, you may recall.
It’s true that since Obama occupied the White House, his
party’s stock has taken
a nose-dive – a net
loss of 9 governorships, 7 Senate seats, and 60 House seats. But there’s no
guarantee that trend will continue.
The leader of the party that whines incessantly about the influence of money
in politics has announced he’ll spend $1 billion to win re-election….Read more.

Floyd and Mary Beth Brown, FloydReports.comI’m going to bankrupt this country by any means necessary, and if you
try to stop me or slow me down, I’ll shut the government down and blame it on
you. If you try to stop me, you can kiss your political careers good-bye. Isn’t
this essentially what Barack Obama and his allies in the U.S. Senate are saying
to the Republican leaders in Congress?
One thing is certain: it’s not an idle threat. Obama and his allies control
the executive branch of the government and the United States Senate. They alsocontrol
the mainstream media. On top of that, they control the unions, which they
are sending
into the streets.
Our great nation is on the verge of bankruptcy. The national debt stands at
$14 trillion. When the people cried out and demanded that Washington put a stop
to the out-of-control waste and spending, Barack Obama instead responded by proposing a
budget that, by his own calculations, doubles our already
untenable debt over the next decade.
Americans wrongly assumed that Obama would change accordingly after taking
his election “shellacking.” He said the day after the elections, “And I told
John Boehner and Mitch McConnell last night, I am very eager to sit down with
members of both parties and figure out how we can move forward together.” His
compromising rhetoric worked to get Americans to back-off and lower their
defenses.
In reality, when the Republican-led House of Representatives put forth
legislation to cut our out-of-control deficit by $61 billion — a mere 3.7
percent of our deficit and a scant 0.4 percent of our national debt — Barack
Obama and his allies in Congress threatened to shut the government down.Read
more.

Ben Johnson, FloydReports.com
In his 2011
State of the Union Address, Barack Obama gave himself five more years of
trillion-dollar deficit spending, a $678 billion income tax hike, a Social
Security tax increase, and the permanent extension of ObamaCare – and he gave
Republicans medical malpractice reform and a joke about a salmon.
Since his inauguration, the president has gone on a two-year spending orgy
unrivaled since the days of Lyndon Johnson or FDR. Faced with a national
backlash against towering debt, he has come up with a “compromise”: Americans
should accept the big government expansion he has forced down their throats and
move on. This follows the president’s familiar pattern of forcing through costly
and unpopular measures, then promising “discipline” after the fact.
The most reported aspect of the speech was Obama’s pledge to freeze
discretionary, non-military spending at their current levels – exempting such
major programs as Social Security, Medicare, Medicaid, and Homeland
Security.
At the risk of stating the obvious, which perhaps no one has yet stated,there is no “savings.” As President Obama would say, “Let’s be
clear”: Savings is when you reduce the amount of money you are spending. The
president’s proposal is to spend the same amount of money. The only “savings”
would come from the fact that inflation
unleashed by deficit
spending and quantitative
easing will devalue the dollar – but this is hardly a cause for cheer.
History shows that spending freezes rarely freeze anything. The most
ambitious attempt was the 1985 Gramm-Rudman-Hollings Act, which attempted to
control deficit spending by future Congresses, but many of the same politicians
who voted for the bill decided they would not abide by its terms the next year.
Deficits continued to mount. To give a more recent example, last year Congress
approved slightly more
than half of the whopping $11.5 billion in spending cuts Obama requested
last year.
The amount of the budget actually affected is rather modest, indeed. It would
apply to approximately
12 percent of the budget. Alec Phillips, an analyst with Goldman Sachs,
estimates that if every Congress for the next five years holds to current
levels, it would “save” $200 billion. The New York Times noted its
higher estimate of “$250 billion in savings over 10 years would be less than 3
percent of the roughly $9 trillion in additional deficits the government is
expected to accumulate over that time.” Obama’s plan would cost
half-a-trillion dollars more than returning
to 2008 spending levels, as proposed by the most moderate Republicans. Sen.
Rand Paul has proposed a half-a-trillion
dollar spending cutthis year, which includes cutting food stamps
and eliminating the Corporation for Public Broadcasting and the National
Endowment for the Arts. Ohio Congressman Jim Jordan and Senator Jim DeMint
introduced a bill to cut
$2.5 trillion over ten years, eliminating the aforementioned programs as
well as Amtrak and the president’s “high-speed rail” and rolling back spending
to 2006 levels. Obama’s freeze is small beer in its own terms and hypocritical
when paired with his calls for new spending.
The State of the Union made only passing reference to the greatest budgetary
crisis facing us: out of control entitlements (and most of his “solutions” are
bad ideas; see below). “Mandatory” spending alone exceeds projected federal
revenues – the amount of money the government took in all year. If we eliminated
100 percent of discretionary spending – privatized the Post Office, dismantled
the military, and fired every federal prosecutor and judge – we would still run a
deficit.
Nonetheless, the president instructed us, “The final step to winning the
future is to make sure we aren’t buried under a mountain of debt.” As though we
are not already buried under a mountain of debt. As though this were not a
mountain of his own making. As though it were not one he wished to greatly
enlarge.
What Obama intends to freeze is big government. His proposal to hold-the-line
comes after he jacked
up federal spending by 84 percent. After inflating the federal government
beyond the free market’s carrying capacity, he now wishes to maintain the status
quo.
As usual Sen. Jeff Sessions, R-AL, had the best analysis of Obama’s spending
freeze, calling it “a plan for deficit preservation.” The day
after the State of the Union speech, the Congressional Budget Office (CBO)
predicted the deficit for 2011 will be….Read
more.

Fear-mongering works – why not try again? This must be the thinking behind Obama’s latest attempts to manipulate the new Congress. Austan Goolsbee, chairman of the U.S. Council of Economic Advisers, trotted out before the cameras this week to threaten the Republican Congress, saying that if they don’t raise the limit on the USA’s debt ceiling, the “impact on the economy would be catastrophic.”

Goolsbee spun the new lines cooked up in the White House communications office on ABC’s This Week: “If we get to the point where we damage the full faith and credit of the United States, that would be the first default in history caused purely by insanity.”

The real insanity is to continue to roll up debts we have no hope of paying. Goolsbee’s comments are part of a coordinated preemptive plan to blame the new Tea Party Republicans as the economy sputters. When fear reaches high levels, people don’t think clearly, and this is exactly what Obama is counting on.

The current legal limit on borrowing is $14.3 trillion, and unless the new Republican Congress adopts Obama’s proposed higher limit, across-the-board spending cuts will result. How tragic: If the debt ceiling doesn’t pass, politicians will actually have to begin budgeting like adults in Washington.

This is a big test for candidates supported by Tea Party and anti-spending activists. Will they hold to their pledges to rein in government spending? Or, will they adopt the ways of Washington and blink because of Democratic attempts to vilify and marginalize them with their dire threats?

America has only two choices: Stop the insane overspending, or dramatically raise taxes to pay for the free-spending lawmakers’ excesses. There are some great alternatives to raising the debt ceiling. Congress should hold votes to eliminate farm subsidies, abolish the Department of Education, close the Department of Housing and Urban Development (HUD), shut down the Department of Energy, repeal ObamaCare, and bring our troops home from places like Japan and Europe.

During this Christmas season of cheer and good tidings, a universal message is going forth. They are all united — from Barack Obama, to Martha Stewart, to Wall Street banks, to the Federal Reserve — and even your local mall agrees: please borrow to spend more this Christmas.

Americans since 2008 have been tightening their belts, and they have paid down more than $150 billion in consumer debt. This is a remarkable feat and a testimony to the diligence, hard work, and frugality of the American citizen. In contrast to the people, we are embarrassed that our government is encouraging irresponsible and spendthrift behavior.

Little wonder the finances of the U.S. government and the Federal Reserve are in a shambles. When times are tight, overspending and excessive debt is never the answer. Americans intuitively understand this and they are making tough choices to avoid bankruptcy. Barack Obama would be smart to follow their example.

But governments never really tighten the budget. We all learned years ago the idiocy of government accounting when they proclaimed they were making “budget cuts” when spending and borrowing was going up every year. This would be akin to us saying, “We want a Porsche, so we will cut the budget and get a Corvette,” when our salary could only cover payments on a Toyota Corolla.

This upside-down idea was in the news again this week with the bailout of Ireland….

National debt soars to highest level since WWII

The federal debt will represent 62% of the nation’s economy by the end of this year, the highest percentage since just after World War II, according to a long-term budget outlook released today by the non-partisan Congressional Budget Office.

Republicans, who have been talking a lot about the debt in recent months, pounced on the report. “The driver of this debt is spending,” said New Hampshire Sen. Judd Gregg, the top Republican on the Senate Budget Committee. “Our existing debt will be worsened by the president’s new health care entitlement programs…as well as an explosion in existing health care and retirement entitlement spending as the Baby Boomers retire.”

At the end of 2008, the debt equaled about 40 % of the nation’s annual economic output, according to the CBO.

The report comes as the National Commission on Fiscal Responsibility and Reform meets today. The group, created by President Obama, is expected to issue recommendations in December to curb the debt – a point Democrats raised today.

The CBO report “reinforces the importance of the work being done right now by the president’s fiscal commission,” said Sen. Kent Conrad, D-N.D., who chairs the Senate Budget Committee. “We simply cannot allow the federal debt to explode as envisioned under CBO’s projections. The economic security of the country and the quality of life for our children and grandchildren are at stake.”